Was there an 346 2/13/01 - FY '02 OPERATING BUDGET investigation from the D.A.'s Office? I mean, from what I understand, it should have been -- COMMISSIONER APPLEBAUM: There were contracts that were signed by certain people who had not had the authority to sign the contracts, a lot of stories, but not anything in a manner that would be necessary to be brought to the D.A.'s attention. We decided, in conjunction with the Mayor's Office at that time, to put out a number of major competitive bids, to put vending all together, and we have seven or eight or nine different contracts with specific vending companies. We fix the rate of the commission, we fix the price of the products, and it's handled by a company called Best Vending Management Company. We now get reports that the various clubs, associations get money. Now, if there's a specific problem, such as you mentioned, that should be brought to our attention. We monitor that contract. Mr. Harry Hillock, the Deputy Commissioner here, is responsible for that, and we can get to the bottom of it and find out what went wrong. 347 2/13/01 - FY '02 OPERATING BUDGET
Do we monitor it or do we audit it? COMMISSIONER APPLEBAUM: We receive reports.
Well, could we possibly audit some of these things? I mean -- COMMISSIONER APPLEBAUM: Absolutely.
I mean, I would suggest that any facility in the City that's owned by the City that has this outside vending operation should receive an annual audit. I would like to know how many we're cans putting in there and how much they're money taking out and why, in the busiest month of this ice rink season, they only made $2 a day. I can't believe it. COMMISSIONER APPLEBAUM: Well, that -- Mr. Hillock?
We do get an annual report that shows by location what the volume was.
I mean, with all due respect, I -- they're auditing themselves? 348 2/13/01 - FY '02 OPERATING BUDGET
Clearly, we're not going out there to check the volumes, no. 4 COMMISSIONER APPLEBAUM: But best Vending Company are auditing -- Best Vending Company is not a vending company; they're a management company. There are five or six different vending companies that actually service the machines and put the bottles in. Best Vending Company audits the machine. Every time a soda is taken out of the machine, it's called "a click." And 10 clicks times 60 cents -- I think that's we get now -- that machine should get $6. And our vending management company does audit those vending companies and makes sure that we're getting the right return on the machines.
Not to cast any aspersions on anyone in their veracity, I don't have a lot of confidence in the guy we're paying necessarily to be absolutely truthful in their auditing procedure as opposed to the City Controller or an outside auditor. I mean, I find the temptation there quite extensive, as extensive as the old system. 349 2/13/01 - FY '02 OPERATING BUDGET But when are these contracts up? Are they all up at the same time or do they --
Is there any reason why they expire at various times of the year?
Well, what I would request, if I could, is the location of any licensed machine in any City facility, who is responsible for their maintenance, and, you know, who's the company that services them (inaudible) and when those contracts expire.
And have we checked with all these vending companies to make sure that they have the business privilege license. I mean, God forbid they should be located in Philadelphia. You know, I know that's a mere minor issue; I know we can't require people to be here. But do they pay -- you know, are they paying their taxes, are they up to date, and those 350 2/13/01 - FY '02 OPERATING BUDGET kind of things. I mean, have we done -- has the Revenue Department done any kind of due diligence on them prior to the licensing of the machines in the particular locations?
I'm not sure of that aspect of it, but the BPL is checked at the time of the contract award.
At the time it's done? COMMISSIONER APPLEBAUM: There was discussion -- you might be confusing that with the discussion on what we call "pouring rights," where we're try to develop a contract with a major -- either a Coke or a Pepsi Cola to provide us with dollars, which is called "pouring rights," and under those contracts, the vending companies must use either Coke or Pepsi. That's -- we're working with the Managing Director on that concept, yes.
And my final comment on this is that I -- despite what had gone on in the past with all the different deals and different percentages and unregulated apparent arrangements, I got to believe that we could do this ourselves, that we could get a better handle 351 2/13/01 - FY '02 OPERATING BUDGET on what's being sold, what money's coming in, probably get -- absolutely cut out the middle person 'cause we wouldn't need the middle person, anymore, and that these facilities would get the benefit directly from these contracts, as opposed to getting a $60 check at the end of the busiest month of their year. COMMISSIONER APPLEBAUM: Let me respond to that. You're in an area that is an area that can create a tremendous amount of problems and concerns. Vending machines are not a great deal of dollars. But if it's uncontrolled and you might have 10 recreation centers that handle it correctly, and then you might have 20 others who don't handle it correctly, and the funds don't get deposited to where they should go. There are many business people who have warehouses and companies -- and I happened to be one of them in the past, where, in my warehouses, I had vending machines, and the managers would go out and buy the sodas at the food markets and put 'em in the machines and keep all the profits. So it's an area that's a real problem.
It's a management 352 2/13/01 - FY '02 OPERATING BUDGET issue. COMMISSIONER APPLEBAUM: It's a management issue, and that's why we put in a management company to run it for it for us, we have had very positive comments from the police and fire, 'cause they had a tremendous amount of machines. The prison system is not happen with it, 'cause the prison system, a lot of people there were benefitting from those machines that no 11 longer benefit. I won't go into the details, so we now have that controlled, and that money is deposited properly.
I'd feel much better if these particular people were audited, frankly. COMMISSIONER APPLEBAUM: Oh, I agree with --
From outside, not monitoring themselves. COMMISSIONER APPLEBAUM: You're right, you're right.
Thank you. 353 2/13/01 - FY '02 OPERATING BUDGET The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Commissioner, you touched on it earlier today, and I know there was some controversy about the replacement of the playing surface at the stadium, that it wasn't put out for competitive bidding, that a product was selected and the City purchased it. And I know the President received letters, I received letters about that particular issue. Could you explain for the record how we decide whether a particular purchase is made and competitive bidding exists versus the playing surface at the Veterans Stadium, which we didn't, I don't think, need it anyway, but that's another point. COMMISSIONER APPLEBAUM: The playing surface at Vets Stadium ended up being what we call a "sole-source product." The Recreation Department and Vets Stadium, in conjunction with the Phillies and the Eagles, hired a consultant to go out and study the market and come up with the very best product that would service our needs at 354 2/13/01 - FY '02 OPERATING BUDGET Vets Stadium. Every product that they studied varied and was different from each other. There was Next Turf, there was First Turf, there was Real Grass, there was six or seven companies that they studied. They made a very in-depth study and analysis and came up with the conclusion that for us, for Vets Stadium, for the City of Philadelphia, because of the weather conditions and the multi-playing field and moving in and out of stands, that the particular product that they selected, Next Turf, was the best for us. And they wrote the Recreation Commissioner, sent to the Procurement Commissioner a document and his request that we bid that as a sole product. And that was bid as a sole product, Next Turf, for Vets Stadium.
Do you have any input on your request for product that a operating department suggests be sole source? Do you have people within your organization that look at the six products and say, Well, wait a minute, wait a minute. COMMISSIONER APPLEBAUM: We at the 355 2/13/01 - FY '02 OPERATING BUDGET Procurement Department participated in the meetings and looked at the various documentation, and we concurred with that decision.
Let's go a step further. How frequently does the Procurement Department go sole-source? The Police Department would love to have a certain type of vehicle. Can the Police Commissioner call you up and say, I want Fords, Crown Victorias, and that's it? COMMISSIONER APPLEBAUM: We actually made a decision a number of years ago to go sole-source on police cruisers. They're Ford --
Crown Victorias. COMMISSIONER APPLEBAUM: Crown Vics. And the reason why we did that is it made a lot of financial sense to the City of Philadelphia to have a fleet that large using the same cars so that the parts and the training were all interchangeable, and we do -- that is really a sole-source. And another reason why it's a sole-source is at the present time, you cannot buy a police cruiser that's -- Chevy went out of business making them. 356 2/13/01 - FY '02 OPERATING BUDGET
The police -- COMMISSIONER APPLEBAUM: But that was a sole-source. We also made it sole-source for the Police Department bullet-proof vests. We had a gigantic study conducted by the Police Department of vests -- this happened about five, six years ago years ago -- where we brought in many, many companies who wanted to participate. They tailored vests for ten different police officers -- five fame and five males. And each officer wore a particular company's vest for, I think, two or three weeks and had no idea whose company it was -- there was a code number on it -- and filled out extensive reports. And at the end of the total program, which took about six months, the survey showed that "Company X" bullet-proof vest was far superior to the others, and that also went out adds a sole-source. So from time to time, there are some.
Could the Procurement Department provide to the Chair the list of sole-source that we have in our 357 2/13/01 - FY '02 OPERATING BUDGET government? COMMISSIONER APPLEBAUM: Sure.
I didn't know that Crown Victoria Ford was the only police car. Thanks for revealing that. I was trying to use that as analogy, and now I learned two sole-source items that we have in the City of Philadelphia. And I appreciate that. Let's use one that is not as an example. The Police Department calls you and says that they want a particular widget. And they say it's sole-source that that's what we want. Do you have to accept that? COMMISSIONER APPLEBAUM: No. 16 (Unintelligible, parties talking over each other.)
. . . about how they have to convince you. COMMISSIONER APPLEBAUM: They have to convince the Procurement Department and the Procurement Commissioner that their request is valid, makes sense, and defensible, 'cause I'm not going to sit here and have Councilmen attack me for a sole source unless it really is. 358 2/13/01 - FY '02 OPERATING BUDGET So we go through and we have a study and we evaluate and we try to do the very best we can to accommodate the needs. But if they come in, and like, let's say, the Water Department needs four-wheel vehicles. And there, we will go out and we'll put a bid on it and we can describe a four-wheel drive vehicle, and we'll have Ford Broncos and Chevy Blazers and Jeeps, et cetera and et cetera, and we'll award to the lowest one. So, no, they cannot come back and say to us, We want a Ford Bronco because we like it better than a Chevy Blazer.
So are you telling me that a sole-source -- when we buy police cars, the other vendors aren't -- all of the dealers, or however we buy it, we piggyback on the Pennsylvania deal or whatever, they're not aware that it's a sole source, and they don't -- do they have the ability of charging us more if we had other vehicles to chose from? In other words, how do you control a sole-source item that we're not getting gouged because the vendor knows that it's that product that we want? 359 2/13/01 - FY '02 OPERATING BUDGET COMMISSIONER APPLEBAUM: Because many, many times, a sole-source product can be sold to us by many dealers.
Right. COMMISSIONER APPLEBAUM: So when you have that protection -- like with the Ford Crown Vics, the bid will go out to many, many dealers, so no one's going to gouge us 'cause they all want the business. And they also -- we have a State price, so we know what the State price. So that's pretty much controlled. And in reality, with Ford Crown Vics, at the present time, as I mentioned before, there are no other full-size police vehicles available.
Well, I think it's time we start looking at other police departments that are using other than a dinosaur for a police car, but that's another day that we can discuss that, because there are other vehicles that work well in police service in other cities throughout this country. COMMISSIONER APPLEBAUM: When they did the study, the determination was that a large, full-size car was safer than the smaller cars. 360 2/13/01 - FY '02 OPERATING BUDGET And that's why -- I think that's the reason they stayed with that.
But I would appreciate reviewing if that's -- and I would assume that's a reasonable request, to see exactly what we're buying and what possible competition would be available. COMMISSIONER APPLEBAUM: Sure.
Thank you, Commissioner. COMMISSIONER APPLEBAUM: Thank you.
Thank you. Thank you very much, Commissioner. The Revenue Department is next. It's been a long day. Thank you for waiting. (Witnesses come forward.)
Can I -- I need to put information on the record before Miss Kammerdeiner starts. Is that okay with you?
By all means. 361 2/13/01 - FY '02 OPERATING BUDGET
Thank you, Madam President. Madam President, you may recall earlier today, there was some questioning of the Mayor's Chief of Staff, and I made some comments to her, which were a continuation of a conversation that took place earlier outside of the chambers. I have subsequently learned that I may have created some level of discomfort as a result of one of the complimentary comments that I made. And as a result -- and I've talked to the Chief of Staff, but the comments were made here and so it's appropriate to make further comment here. One, I want to sincerely apologize for any discomfort that may have occurred as a result of our earlier exchange. Two, there was never any intention to have that situation either with the Chief of Staff or any other individual. And I exercised poor judgment in allowing our friendship, and sometimes the playfulness of it, to enter into our more serious discussions and deliberations here today. And so I wanted to place that apology and regret on the record. And I appreciate the 362 2/13/01 - FY '02 OPERATING BUDGET President giving me that opportunity for a personal moment. Thank you.
Thank you. Good afternoon, and thank you for your patience. We do have a copy of your testimony, which we will give to the stenographer. If you will abbreviate your testimony, we'd really appreciate it. COMMISSIONER KAMMERDEINER: Certainly. Good afternoon, President Verna and members of City Council. I'm Nancy Kammerdeiner, Revenue Commissioner. And with me this afternoon is Denise Garrett, Chief of the Water Revenue Bureau. We're pleased to be with you today to discuss the proposed FY '02 Operating Budget for the Department of Revenue and the Water Revenue Bureau. I'll highlight a couple of the key features of the Operating Budget request and recent activities for the tax side of the operation. And then Denise will follow with some testimony about the Water Revenue Bureau. The FY '02 General Fund appropriation 363 2/13/01 - FY '02 OPERATING BUDGET request for the Department of Revenue totals $18,031,588, of which $12,984,000 is in Class 100. This Class 100 request will provide full-year funding for 326 full-time positions. In Class 200, we're requesting $4,188,210. That's an increase of $645,000 over FY '01 estimated obligations. This increase will cover the cost of mailing services provided to other City agencies, as well as the recent postal rate increase. For Classes 3 and 400, the Department requests a total of $859,378. In addition to the General Fund, revenue request funding from the Grants Revenue Fund and the Water Fund, the Grants Revenue Fund appropriation request of $2,360,576 provides for payments to collection agencies and for school tax enforcement activities. In the Water Fund, we're requesting $1,723,746. This provides funding for 44 full-time positions and payment processing and in the outgoing mail processing center. The Department of Revenue is committed to supporting Mayor Street's objective to maintain 364 2/13/01 - FY '02 OPERATING BUDGET fiscal health with a steady tax reduction. Notwithstanding the gradual decreases in rates for the wage tax and the business privilege tax, in Fiscal Year 2000, the City realized a net annual increase in tax collections of $93 million over the previous fiscal year. Collections from delinquent and unregistered taxpayers continue to increase, as the Department centralizes and automates its systems. Increased use of data-matching has also enhanced revenue collection. These efforts will continue and expand in Fiscal Year 2002. The Department looks forward to increasing its use of the Internet and electronic funds transfers in the coming months. We also plan to take advantage of technology improvements in telecommunications. I should note that Verizon is currently conduction an assessment of the telephone system requirements of several City departments, including Revenue and Water Revenue. We will use the results of this assessment as a guide for improving telephone support for collections and for enhancing customer service. At the same time, the Department 365 2/13/01 - FY '02 OPERATING BUDGET continues its efforts to improve taxpayer service. We are continuing to work to reduce telephone and walk-in waiting times, to increase telephone answer rates, and to reduce the amount of time that it takes to answer correspondence. Efforts are also underway to improve the accuracy and clarity of information provided to taxpayers. Philadelphia's tax laws are complicated, but we're working to make the information about these facts clearer and more straightforward. We're also making efforts to improve the database information that we maintain concerning each tax payer. I hope this gives you some idea of the activities of the Department and what we are doing to maximize revenue, while remaining mindful of the need to treat taxpayers fairly and efficiently. Denise will now make a few comments about the Water Revenue Bureau.
Good afternoon, President Verna and members of City Council. I'm Denise Garrett, Chief of the Water Revenue Bureau. And I 366 2/13/01 - FY '02 OPERATING BUDGET thank you for the opportunity to present testimony on the Water Revenue Bureau Fiscal Year 2002 Operating Budget requests. The Water Revenue Bureau continues to operate under the executive direction of the Director of Finance, while maintaining a working and planning relationship with the Revenue and Water Departments. The Bureau is requesting a Water Fund allocation of $17,762,747 in its Fiscal Year 2000 Operating Budget request, with $9,580,015 for Class 100 to support 256 full-time employees. We are also asking for $7,462,858 for Class 200, and $710,374 for Classes 300 and 400. This is an increase of $1,093,481 over Fiscal Year 2001 estimated obligations, and it includes the negotiated wage increase. The Water Revenue Bureau is responsible for a variety of customer services, accurate billing, and timely collections to the water and sewer customers of the Water Department. In 1999, as this Council is aware, the Water Department and the Water Revenue Bureau successfully completed a project to install over 450,000 residential and 367 2/13/01 - FY '02 OPERATING BUDGET commercial automatic meter-readers. The project is being hailed by the Automatic Meter-Reading Association as the most successful in the AMR industry for water. In addition, the Water Department is currently installing AMR devices on larger commercial meters and will provide the status of this project in their Fiscal Year 2002 Operating Budget testimony. The accuracy of reading is one of the most critical factors in the collection of revenue. 9 million, for a rate of 37 percent. Our Fiscal Year '02 projection for readings is 5,175,477 readings, at a rate of 99 percent, with an accuracy rate exceeding 99 percent. This improvement in reading and accuracy has had a positive benefit throughout the Bureau. To date, our AMR initiative has allowed us to redeploy over 64 employees into other areas of operations, including revenue recovery. With AMR devices, we now have data to more readily detect the unauthorized use of water. In Fiscal Year 2002, we are projecting 368 2/13/01 - FY '02 OPERATING BUDGET the percentage of illegally restored services to consistently drop. We realized a drop from 1997 of approximately 55 percent. Clearly our heightened presence is having an impact, and the AMR is a key tool in that effort. As customer disputes have declined, the rate at which customers pay on time continues to increase. The current collections rate measures the extent to which customers pay on time. The Fiscal Year 2000 current collections rate rose to 86 percent, up from 78 percent in Fiscal Year 1999. We project Fiscal Year '02 to be 87 percent, primarily because we are now down to our hard-core delinquent accounts. We have introduced many payment programs over the years to effect this increase, including direct checking account deductions, a program known as "E-Check," automated bank by phone for customers using banks and check-cashing agencies to facilitate quick payment, transfer, and posting. And we've also introduced group billing, which incorporates all water bills on one statement for customers with over accounts. 25 After many years of growth, in 1998, 369 2/13/01 - FY '02 OPERATING BUDGET the receivable balances in the Water Fund are beginning to decline. We project Fiscal Year '02 to see a continual decline of 3 percent. Let me just mention two other programs. We continue our effort with collection agencies, and we are also implementing a new customer billing information system, hopefully to come on line by Fiscal Year '02. We are also participating with the Revenue Department in the Call Center Initiative to continue to improve our services to customers via our Call Center operations.
And we are also continuing our support of our customer assistance programs, anticipating servicing over 12,000 customers in Fiscal Year '02. I thank you for this opportunity to provide our testimony, and we'd be pleased to answer your questions.
Commissioner, can tell us what proposed legislation you are planning on submitting to City Council concerning 370 2/13/01 - FY '02 OPERATING BUDGET electronic fund transfers? COMMISSIONER KAMMERDEINER: Right now, as I indicated in my written testimony, we accept voluntary payments through the electronic funds process -- transfer process. And we're looking at making this mandatory. Both the federal and the State governments require payments over a certain size to be transmitted to them through the electronic funds transfer process. We're evaluating what they have done, comparing their payment amounts to the kinds of payments our taxpayers make, primarily for wage tax, but also for the other taxes, and are seeking to propose legislation that would mandate these payments over certain dollar amounts. What we're trying to determine now is what that dollar amount should be.
Thank you. Commissioner, on , Line 81 of the Budget in Brief, can you tell us why you lowered the revenue estimates for the parking fines below the FY '01 budgeted amount? COMMISSIONER KAMMERDEINER: Those estimates were prepared in the Budget Bureau. If 371 2/13/01 - FY '02 OPERATING BUDGET I could turn to Rob Dubow on that. (Witness comes forward.)
Mr. Dubow, do you have your book? It's Line 81, .
We are using estimates supplied to us by the Parking Authority, so we're taking their numbers, and that's why -- that's why it's at the 14.3.
I'm sorry, I didn't understand a word you said. I'm sorry.
I think it's the mics -- it's something in here today.
We actually, for the life of this plan, are using figures supplied to us by the Parking Authority. And so their projection for '01 is lower than what we included in our budget.
Let me ask you, what are the Parking Authority's expenses and who approves their budget? 372 2/13/01 - FY '02 OPERATING BUDGET
We'd have to get back to you on their expenditures. And their budget is submitted to the --
And we can get that to you. Their budget's submitted to the Finance Director for approval.
Their budget is submitted to the Finance Director for approval.
So the Parking Authority's expenses are approved by the Finance Director; is that what I'm hearing?
All right, we'd like to know what their expenses are.
And why was 373 2/13/01 - FY '02 OPERATING BUDGET it below --
The Chair recognizes Councilman Rizzo. Is he in the room? (Councilman Rizzo is not present at this time.
Does anyone else have any questions of these witnesses? (No questions.)
We thank you very much. COMMISSIONER KAMMERDEINER: Thank you.
The last department is the Board of Revision of Taxes. Gentlemen, thank you for your patience. (Witnesses come forward.)
Good afternoon. David Glancey, for the Board of Revision of Taxes. With me is the Secretary of the Board, Robert Nix; Member of the Board, Charles Ruttamede (ph.); Executive Director, Rick Foglia. 374 2/13/01 - FY '02 OPERATING BUDGET And we want to present you with a Valentine's Day present early, and that is, we've submitted our written testimony, and we'll be happy to answer any questions you may have.
Oh, that's wonderful. Thank you, thank you. (Laughter.)
Are there any questions from members of the committee of the Board of Revision of Taxes? (No questions.)
Wonderful. I think Councilman Nutter wants to wish you a happy Valentine's Day.
I would tremendously love to do that, and if we were at an earlier point in the day, I think that we would all benefit from my good friend giving us a complete explanation of the City's reassessment process.
I can do that now, Councilman. 375 2/13/01 - FY '02 OPERATING BUDGET
I've been subjected to it -- I mean, I've heard it a couple times, Madam Chair, and after an hour of non-repetitive testimony, I knew less when it was over than when it started. Thank you.
Thank you. Thank you all very much. Thank you for your patience.
Madam President, on a personal note -- I'm Charles Ruttamede, and I'd like to thank you and Councilman Darrell Clarke for the wonderful citation that you submitted to my family on Friday.
In the event of the death deft my stepfather, Squire William. So thank you again.
You're 376 2/13/01 - FY '02 OPERATING BUDGET welcome, I'm sure. Thank you. All right, this conclude the public hearing of the Committee of the Whole for today. The committee will stand in recess until tomorrow, Wednesday, February 14th, 2001, at a.m. 7 Thank you all very much 8 - - - 9 (Adjourned at 5:55 p.m.) 377 C E R T I F I C A T E WE HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, February 13, 2001, were reported fully and accurately by us, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE OPERATING BUDGET BILL NO.'S 010001, 010002, 010005 _________________________________, MAUREEN BRODERICK, Registered Professional Reporter __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter